California Short Sales

Home Prices Fell 4.5% in last 12 months.
Prices off more than 32% from their highs set in July 2006

Those seriously underwater and short selling are making a wise decision. Those clinging on to belief that housing prices will quickly recover are mistaken.

By short selling, consumers shift part of their loss to the lenders. Those who ride it out, will need to scrimp and save for a decade, hoping to get not ahead (but simply to get back to the point of zero equity).

Mike Shedlock, Investment Advisor

Everyone Experiences Financial Difficulties and Everyone's Situation is Unique.

We understand there are many reasons why homeowners get behind on their mortgage payments. Unfortunately in 2010 foreclosures continued at a record pace in California despite government programs to counter the trend. In March 2011 Foreclosure filings improved to 1 in every 223 housing units.

1 in Every 248 Housing Units in California
Received a Foreclosure Filing in June 2011

June 2011 Foreclosure Activity by County

Short Sale or Loan Modification? Which is Right for You?

Loan Modification: The table below shows estimated modified payments excluding taxes and insurance. Even though some homeowners are underwater on their properties, if the modified payment is low enough they will decide to keep the property either permanently or make payments temporarily until the timing is right for them to seek an alternative solution.

Loan Balance	Principle & Interest Payment* (40 Year Amortization)**	Principle & Interest Payment* (30 Year Amortization)**
$200,000	$ 606.00	$ 739.00
$300,000	$ 908.00	$1108.00
$400,000	$1211.00	$1478.00
$500,000	$1514.00	$1848.00
$700,000	$2119.00	$2587.00
$900,000	$2725.00	$3326.00
* Estimated payments do not include Property Tax & Homeowners Insurance. Payment amounts are fixed for a period of 3 to 5 years in most cases. Normally after the fixed period the payment will increase over a period of years to the current market rate at the time of the modification.
** Amortization term may be extended to 40 years, reset to 30 years or will remain the same.
All figures are for illustrative purposes only.

If you feel a loan modification is the right way to go or you would like to go through the process and find out how low a payment the bank will offer you we can help you.

Why California Homeowners Hire Us:

We have more experience. For 3 years we've been helping California homeowners modify their loans and lower their monthly payments.
We know how each lender works. We've worked with almost every lender and service company there is, the majority of them multiple times.
We understand the situation from both borrower's and lender's point of view and work to mediate a successful solution for all parties.
You don't have to worry about something going wrong. We have the experience and knowledge to guide you through the process.
We will address your concerns and worries throughout the process.
We position your case to take advantage of the best possible terms your lender can offer.
We keep you updated throughout the process. Modifications take anywhere from 30 to 90 days.
We don't take NO for an answer. We demand your lender offer a modification that's doable and affordable.
Even after you've signed your modification documents we make sure your lender implements your modification correctly.
You can call us anytime. We're available from 8 am to 8 pm Monday to Friday and Saturday from 10 am to 3 pm PST..

For the Month of July Only
We've lowered our fee from $995.00 to $595.00. Our goal is to work with as many California homeowners as we can this month to help them keep their homes and negotiate payments they can afford.

Let us be your Advocate.

We are Licensed Real Estate Professionals with the experience and knowledge of the lending industry to resolve your situation in the most favorable terms possible.

Although lenders in most cases do not want to foreclose on your home, you may be experiencing frustration in dealing with their bureaucracy.

A recent Freddie Mac, Roper survey of delinquent borrowers found nearly two-thirds were unaware of their workout options. Why? Because their lender didn't bother to inform them.

In many cases, borrowers end up agreeing to a workout plan, far less favorable than otherwise possible, due to a lack of experience and knowledge in negotiating with lenders.

Is a Short Sale Better for Your Situation?
A Short Sale is when a home is sold for less than the amount owed and the lender agrees to release the lien and settle for less than the full payment.

Why would a lender accept a Short Sale? A Short Sale is a form of loss mitigation, the lender (investor) is presented with a choice between a smaller loss through a Short Sale or a larger loss through foreclosure, so accepting the Short Sale “mitigates the loss.”

The advantage of a Short Sale compared to a foreclosure is that you avoid having a “debt discharged due to foreclosure” on your credit file which can reduce your credit score by over 250 points and keep you from qualifying for a new home loan for up to 5 years. With a Short Sale you can qualify for a new home loan in just 24 months. Also if a Short Sale is negotiated properly with your lender you can avoid a possible deficiency judgment on your 2nd lien, if applicable.

Qualifying for a Short Sale
For a Short Sale to be approved by your lender you must show a hardship. A hardship is defined as a situation that is the result of some extenuating circumstance that forces you into a position where you can no longer afford the mortgage payments. Some examples of a hardship are loss of income, unemployment, divorce, illness and job transfer. We also have negotiated short sales for borrowers who can afford their payments but their property is so far underwater the lender agrees to the short sale instead of a foreclosure.

Lenders will also allow a short sale on an investment property. Some examples of hardship include the amount of rent charged does not cover the mortgage payment and related expenses and you cannot afford to pay out-of-pocket to make up the difference. You are unable to rent the property at a price that covers all expenses. You cannot afford to fix damage to the property that keeps you from renting it out.

Why Walking Away is not a Good Idea
Fannie Mae and other lenders have announced policy changes concerning borrowers who Walk Away. Fannie Mae announced in June of this year, that defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure.

Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.

Home Affordable Foreclosure Alternatives (HAFA) Program
In 2009, the Treasury Department introduced the HAFA Short Sale program to provide a viable option for homeowners who are unable to keep their home through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010 and ends on December 31, 2012. The HAFA program offers up to $3000 to the homeowner for relocation assistance at the completion of the short sale.

HAFA provides incentives in connection with a short sale on eligible loans. Servicers participating in HAMP are also required to comply with HAFA.

HAFA Provisions

Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
Uses standard processes, documents, and timeframes/deadlines.
Provides the following financial incentives: $3,000 for borrower relocation assistance, $1,500 for servicers to cover administrative and processing costs; Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

Benefit of a Short Sale When Buying A New Home
Fannie Mae's new policies for manually underwritten loans related to the time period that must elapse before borrowers can demonstrate they have reestablished an acceptable credit history after the occurrence of a short sale or foreclosure.

Short Sale
2-year time period from completion date.
Additional Requirements: None
Note: No exceptions are permitted to the 2-year time period due to extenuating circumstances.

Foreclosure
5-year time period from completion date.
Additional requirements that apply after 5 years up to 7 years following completion date:

The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.
Purchase of a second home or investment property is not permitted.
Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
Cash-out refinances are not permitted for any occupancy type.

Deed-in-Lieu of Foreclosure
4-year time period from completion date (date deed-in-lieu executed)
Additional requirements that apply after 4 years up to 7 years following completion date:

Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction.
Limited-cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.

Tax Considerations of a Short Sale - Federal
On December 20, 2007 President Bush Signed H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007.

The law applies to primary residences only and takes effect from January 1, 2007 through December 31, 2012. It provides relief to home owners by shielding them from the additional burden of potential federal income tax on any amount written off or forgiven by their lender in case of foreclosure or short sale. Consultation with an experienced tax professional to see how the law applies in your circumstance is advisable.

For more information Click Here - IRS Guidance regarding The Mortgage Forgiveness Debt Relief Act of 2007

Tax Considerations of a Short Sale - State of California
On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013.
For more information Click Here.

New Law Gives California Homeowners Deficiency Protection After A Short Sale
Gov. Schwarzenegger signed a state bill into law September 30th prohibiting mortgage holders from pursuing deficiencies after a short sale is accepted.

Before S.B. 931 was signed, distressed borrowers who sold their homes for less than the owed amount were still in danger of owing the debt left over, or the deficiency. Many lenders routinely granted deficiency waivers, but now it is required by law.

The law applies to all recourse and non-recourse first deed of trust or first mortgage loans. For more information Click Here.

How Do I Get Started?
The first thing we need to do is evaluate your situation, which includes a conference call with your lender to understand your loan terms and current status. Only after discussions with both you and your lender can we determine if a Short Sale is the best solution. Many people have called us resigned to losing their home to happily find out we were able to negotiate a modification of their loan that made it possible to keep their home.

If a Short Sale is the best solution for you, we will immediately begin the process. A Comparative Market Analysis will be ordered and a listing agent will be assigned. A marketing strategy will be developed based on the time frame we have to complete the Short Sale.

Short Sales normally take 90 days to complete. Lender approval will take up to 60 days from the time an offer is submitted. Once approved 30 days will be given to close escrow.

Is There a Fee to Hire Your Company for a Short Sale?
Absolutely not. Our short sale services are provided at no cost to the homeowner.

What Areas do You Cover?
We cover the entire state of California. Our main office is in Los Angeles.

We will assign a real estate agent in your area, an agent experienced with short sales and in most cases, an agent that is part of our statewide network of agents we successfully work with on a consistent basis.

The real estate agent will be responsible for listing and marketing your property and we are responsible for working with you, your lender or lenders, the title and escrow company, the buyer's agent and the buyer's finance company to successfully complete the Short Sale.

Let us be your Advocate.
We are Licensed Professionals with 27 years of experience in the real estate and lending industry. We specialize in Loan Modifications and Short Sale Services.

Our philosophy can be summed up in one sentence - “Total commitment to our client's needs and what's best for them.”

We have the experience and knowledge to resolve your situation in the most favorable terms possible.

Please fill out the form below or if you prefer, call us at 800-589-0938 to discuss your situation. We are available Monday to Friday 8:00AM to 8:00PM PST. By completing this form you are in no way obligated. Our initial consultation is always Free.